Gold prices rose in tandem with equity markets today thanks to support from a positive news flow from Europe and comments by chairman of the Federal Reserve Ben Bernanke.
In his testimony to the US Congress, Bernanke said further stimulus action was on the cards, while noting that the recovery had been slower than expected.
Today’s US employment data added to speculation that the Fed could soon launch a third round of quantitative easing, showing that initial claims for jobless benefits surged 34,000 to 386,000 last week.
More money printing by the Fed would weaken the US dollar, which has an inverse relationship with gold, and boost the yellow metal’s appeal as an inflation hedge.
In the meantime, the German parliament is widely expected to approve the country’s participation in an aid package for struggling Spanish banks when it holds the vote later today.
It was also reported that the European Stability Mechanism bailout fund will be allowed to buy Spanish debt on primary and secondary markets, reducing demand for safe haven assets including the US dollar.
Gold traded at US$1,584/oz this afternoon, up US$10 from Wednesday’s close. Other precious metals moved in the same direction as gold with silver climbing 20 cents to US$27.38/oz and platinum tacking on US$12 to reach US$1,414/oz.
Today’s top risers in the sector were:
ECR Minerals (LON:ECR), up 38 percent at 0.47 pence at midday
Wishbone Gold (LON:WSBN), up 14 percent at 3.14 pence
Angel Mining (LON:ANGM), up 10.5 percent at 10.2 pence
Condor Gold (LON:CNR), up 8.5 percent at 105 pence
Kryso Resources (LON:KYS), up 5.5 percent at 33.5 pence
Arian Silver (LON:AGQ), up 4 percent at 11.88 pence